USTR Off to London, Geneva

Geneva - US Trade Representative Susan Schwab will hold informal bilateral discussions in London with her three major counterparts in the Doha Development Agenda negotiations this weekend and then travel to Geneva to meet with World Trade Organization Director General Pascal Lamy and others, WTD was told (WTD, 3/1/07).

Ms. Schwab is expected to hold bilateral meetings with European Union trade commissioner Peter Mandelson, Brazilian foreign minister Celso Amorim, Indian trade minister Kamal Nath and WTO Chief Pascal Lamy - on Monday. She also will address the trade envoys of the African group as well as hold bilateral meetings with some negotiating chairs in Geneva.

Diplomatic sources in Washington suggest that all four sides are "very close" to an agreement in the long-stalled talks on negotiating modalities that would lead to a final agreement by the end of the year. They said an agreement will be "in principle" and not include specific numbers.

Some members in Geneva, however, seem concerned that an agreement in principle - without specifics - could be risky. Full agreement on modalities - including formula numbers for agriculture as well as industrial goods - was the original intent when the talks were suspended last July.

The United States now wants only a "Hong Kong-plus" agreement - referring to the last round of ministerial decisions made in 2004. Critics here suggest it would be easier for the Bush Administration to deal with Congress on renewing Trade Promotion Authority with only an outline of a final agreement - without the specifics that could be easily shot down. Such a package of principles would attempt to clarify what commitments will be undertaken by members. Specific figures will be worked out later - perhaps by the end of the year, sources told WTD.

A Dangerous Breakthrough

But trade diplomats from African countries said it is dangerous to finalize only principles in the "breakthrough" at this point while leaving numbers open until December. The fear is that developing countries will pay much more in such a bargain. "Such a 'breakthrough' will significantly reduce the level of ambition and, thereby, undermine the developmental components in the agreement," said one African trade diplomat.

In Washington, Deputy US Trade Representative John Veroneau and Swedish Minister for Foreign Trade Sten Tolgfors both expressed optimism about a coming breakthrough. "There has been a very important sea change over the last few months," Mr. Veroneau told a seminar sponsored by the Swedish Embassy. Although "substantial gaps remain," he senses new momentum - particularly because everyone realizes the window of opportunity for getting a deal "will not stay open forever."

Mr. Tolgfors - who was in Washington for meetings with US trade officials and members of Congress - told reporters he is hoping for a "mini-breakthrough" this spring. He described the parameters of such a breakthrough as a triangle - including increased EU flexibility on agricultural tariffs, a US move to further cut its domestic farm support and cooperation by Brazil and India on industrial tariffs.

Addressing this year's Agriculture Outlook conference yesterday, Agriculture Department Deputy Undersecretary for Farm and Foreign Agricultural Services Ellen Terpstra repeated "bottom-line" demands of the United States in the Doha negotiations - real and new market access for US producers in return for more domestic spending cuts by the United States. She also said that exceptions to tariff cuts must be limited.

The US offer officially on the negotiating table from 2005 is an "ambitious" one - and has yet to be matched by others, Ms. Terpstra remarked.